The University System of New Hampshire wins: NH's students lose

February 18. 2013 5:13PMGov. Maggie Hassan had a rare opportunity to force serious, long-term improvements within the University System of New Hampshire. She squandered it for a measly two-year tuition freeze.

In the last two-year state budget, legislators cut roughly $100 million from USNH. The system offered to freeze tuition for two years if legislators restored that funding. In her budget address last week, here is the deal Gov. Hassan announced:

"The university system will receive an increase of $20 million in fiscal year '14 with an additional increase of $15 million in fiscal year '15, bringing the system back to 90 percent of where it was before the cuts. And we have not only fully restored funding for the Community College System in the first year, but added $3 million in the second.

"In exchange, the leadership of both the community college and university systems have assured me they will go to their boards with a plan to freeze tuition for the next two years."

Simply put, Hassan offered the university system $55 million ($20 million in 2014, then $20 million plus another $15 million the next year) in exchange for an intention to present a plan to freeze tuition for those two years. Hassan's restored funds raise USNH funding by $35 million a year - forever. But the tuition freeze expires in two years. That is a terrible deal for students and taxpayers. It does nothing to cut costs at USNH institutions. The tuition freeze addresses the sticker price, not the underlying expenses.

Hassan would have done New Hampshire students a greater service by putting that $35 million a year into the college scholarships she funded. Hassan dedicated $4 million to need-based scholarships that New Hampshire students can use at any public or private college or university in the state (as well as some out-of-state institutions). Taking the money she offered to USNH and funding those scholarships instead would have empowered the students by forcing USNH institutions to compete more aggressively for their money. That would have produced a more lasting drop in prices while likely stimulating longer-term structural reforms that would keep those prices down while increasing quality.

Hassan's failure to apply market principles has cost students dearly. Unfortunately, this Legislature is not likely to correct that mistake.